At last year’s Stretch conference, I had the opportunity to meet Shel Perkins, a management advisor to creative services firms. Shel is a graphic designer, management consultant and educator with nineteen years of experience in managing the operations of leading creative firms in the U.S. and the U.K. He has served on the national board of the Association of Professional Design Firms and has been honored as an AIGA Fellow “in recognition of significant personal and professional contributions to raising the standards of excellence within the design community.” His book, Talent Is Not Enough: Business Secrets for Designers, will be published this year by New Riders (
www.shelperkins.com for more information).
His workshop at the conference piqued my curiosity since we were both talking about the topic of pricing to an audience of creative professionals. In interviewing him for this column, I found we had many parallel experiences with clients and pricing. I asked him to share highlights of his program that touched on four topics: pricing basics, usage rights, negotiating and preparing proposals.
CA: Walk us through your ideas on “pricing basics;” I am always surprised when I give my own presentations at the number of working pros that do not have fundamentals such as their break-even point or standard terms and conditions.
SP: Smart pricing involves knowing what each project will cost you to produce. You have to know how much to charge to break even, and you must have a target profit margin built into the standard billing rates that you use to develop preliminary budgets. For planning purposes, this will get you to a “suggested retail” price. Then you’ll make a judgment call and adjust the final project price to reflect market conditions and the ultimate value of the project to the client.
CA: When you reference different types of the pricing model, how do you account for usage rights when a designer does not quote use-based pricing? I have talked with a couple of copyright attorneys as well as from my own experience selling design services—the rule is that “no usage stated (for the design work) means the client does not get any rights to use the design.”
SP: This is an interesting point. Every designer produces original work that is covered by copyright protection, so every design contract needs to address the issues of ownership and usage. This can be negotiated in different ways, based on who you are and what you are designing. For example, if you are a freelancer who has been brought into a design firm to help them meet a deadline, you probably will be asked to sign a statement defining your contribution to the project as a “work made for hire,” which means that the design firm will own it right from the start. Or, if the project doesn’t meet the work-for-hire criteria, you will be asked for an assignment of all rights—a full transfer of intellectual property rights to the design firm. This will not change the freelance rate that they pay you.
CA: Describe the models you recommend for designers to deal with pricing.
SP: When a graphic designer is negotiating a fixed-fee project directly with a business client (as opposed to freelancing for a design firm), the contract will usually include an assignment of all rights. It might include several types of intellectual property. For example, when a new corporate identity is developed and sold to a client, the sale typically includes an assignment of all rights. That means that the client will be able to do whatever they want with it. The client will go on to complete U.S. and international registration of copyright, trademark, patent and other rights in their own name. Designers should simply charge a higher fee for any project that involves a full assignment of rights, and the transfer should be contingent upon receipt of full payment.
A different model is to include licensing language in the contract. A license is a limited grant of rights to use your work in a specified way. The extent of the license that you grant will vary based on the nature of the work involved. The rights may be limited to use on certain products, in particular media, in a certain territory, and/or for a specified time period. If the client later decides that they need additional rights, they will have to renegotiate with you and pay additional fees.